This originally was a dev board post for Star Wars Galaxies roughly 5 years ago. Digging through old documents, I found it, and thought of it's application for the landscape of todays economic engines for MMOs. Its still strongly applicable to anyone considering how to craft a virtual economy, as well as in crafting a new OWE document.
Some things have bee modified from the original in order to make more general sense, and others have been fixed up just for sensical purposes. And others just have been added to make a more complete understanding.
Consider this Setting:
A rich man sends three people to a remote island paradise. They are fully expected to turn this island into their home. Upon arrival, their shelter is made for them and knives is provided to cut up food and craft wood, but everything else is expected to be gained through their own labour. These three people arrive with exactly the same survival skills as one another.
The island itself is quite large, with a large abundance of flora and fauna available for consumption, as well as the sea to provide more food. Bamboo and other forms of wood are also plentiful.
The three residents discuss the basic needs that they will have to cover. Primarily, they agree that food is the main concern that they will continually face. Food could be hunted from an animal on the island. Each animal returns enough food to feed all three, but goes bad after a day.
To hunt, they need to have spears crafted to kill. The tool’s blades could be made from bone from animals hunted on the island (one animal returns two useful bones), and the shaft from the wood. An axe made with a similar bone blade and wooden shaft of the spear would harvest the wood. In this manner, the people have reduced their resource needs to two raw resources; Wood and bone. (ignore the chicken before the egg paradox. Assume all three contribute together to form thier first tools)
Skill Division
The next problem facing these three people is how to go about splitting up the chores. Imagine that initially, each person went their own way. Each would then harvest their own lumber, kill their own food, and craft the items needed to do so. With their abilities exactly the same, each would require the same amount of time on a task. The time and resources involved in the tasks would look something like this:
Task_______________|| Time_________|| Recources needed/expended
Gather 1 wood.............1/3 a day.......2 wood breaks an axe
Gather 1 animal...........2/3 a day.......1 animal breaks a spear
Craft 1 axe...............1/3 a day.......1 wood and 1 bone needed to make axe
Craft 1 spear.............1/3 a day.......1 wood and 1 bone needed to make axe
If each person harvested enough wood to make one of each tool, crafted the tools, and hunted an animal, the process would take them two full days to return the food needed to feed three people for a day, and every second day, food is being wasted.
After some discussion, it’s decided that each person should specialize in one of three areas; crafting tools, gathering wood, or hunting animals. But why?
If the process is continual, each person only holds 1/3 the responsibility he had before. Each day, he can do his chores towards the gathering of food, and be left with 1/3 of a day to do with what he pleases, whether it be further specialization or leisure.
These gains in productivity time profit each of the three people in terms of time. Each person has now profited 1/3 a day through specialization of skills. The specialization and flow of goods on a normal day would look like this:
.............2 wood ->.......<-2 bones
Gatherer-----------Crafter-----------Hunter
............. <- 1 axe ........1 spear ->
An exchange system has also been set in place between the three individuals now. Because each individual produces certain items, but requires others, a barter system has been initialized. The costs of the goods look as follows:
2 wood = 1 tool = 2 bones
If any one good were considered cheaper or more expensive, the people would stop specialization and return to doing everything themselves.
Specialization Returns
Consider if the crafter utilized his profited leisure time to further advance his skill, and in return crafted superior spears and axes – crafted in half a day instead of 2/3- that cut the time needed to gather and hunt sufficient supplies in a day to ½ a days time instead of two thirds, but need the experience known from previous usage of the basic tools to use them. This forces the specialization to be cemented into place to profit further over the long run, so that every day has now ½ a day of leisure time.
Issue #1: If a fixed money amount is introduced, will there be monetary profit for all?
After each person has settled into their specialization ranks and cannot change paths, the rich benefactor returns and hands each of the three people 100 dollars. Each person cannot change their course of actions as above if the price of a good marginally increases, so there is incentive to gain profit. But the question is, can there monetary profit for only one, two, all, or none?
The truth is, without any injection of money that everyone will break even. If the crafter charges a higher price once to the wood gatherer, he will in turn charge a higher price for wood back to the crafter to break even, and vice versa. The profit in a fixed monetary situation will always result in a break even monetary profit.
Issue #2: What would happen with an injection/leakage to the monetary system?
The first portion of the question really pertains to where such injections and leakages should occur, under the circumstance that information of such flows are globally known. Injections that occur on one end of the flow ( Either the hunter or the gatherer) will result in the crafter capturing the extra profit by charging the extra gain on sales of tools. An Injection to the crafter results, again, on him keeping the gain and keeping prices stable. An injection on both ends of the flow (both hunter and gatherer) would result in initial gains for both, with the crafter capturing the larger part of the gain.
So long as the profit captured by the crafter is less than the total gain on injections, everyone ends up with a monetary profit. The hunter and gatherer both sell at the previous price and earn extra profit from the injections, while the crafter can sell at a higher price than previously to earn profit and not worry about repercussionary price hikes that would balance out profit.
Leakages, such as taxes and imports, would help counterbalance the inflation caused by such injections. Inflation is healthy, so long as it’s a slow gain. When it becomes hyperactive, such leakages by the benefactor would staunch the speed in which the real value of a dollar falls, to the point that it could potentially level off, or even increase the value, dependant on the amount taken with respect to the amount injected. Such policies could vary depending on the wish of the benefactor. For further examples and issues, we’ll assume that the island is injected with money until there is 3000 dollars, and then held constant by balancing out the injections and leakages.
Issue #3: Is there monetary profit after such injections/leaks?
If the money flow is held constant with consistant injections and leakages, there are two varying ways to show profit in the island economy. The first is the non-monetary form.
Each of the three individuals lose a fraction of their profits to imported goods. These goods, which have no concern with the main process of gathering food, are coupled together with the leisure time to calculate the gain possessed by each person. Their non-working time is devoted towards leisure, or towards new skills of value, and the imports support these habits. For example, the specialized hunter spends half his time hunting, the other half in leisure. That leisure time has a minimum value equal to the second animal he could hunt. Along with that, all goods purchased from the outside for use in the extra time can be added into that gain. The net value of all of this is the profit gained from specialization, and can be given a monetary value.
The second method is to consider leakages as sunken costs instead of final value subtractions. For example, if the hunter had 100 dollars, and gained 50 dollars from sales of bone, he would profit that 50 dollars. If he was also taxed at a later date for 50 dollars to keep the flow of money even, it would be considered a sunk cost, and start to calculate profits from 100 dollars again. (Many people subconsciously do such acts daily. When buying items at the mall, the mindset is the cost is that shown on the price tag. The taxes added at the register usually affect our next decision to buy instead. Another similar type of example would be Maritime Canadians who move out West for higher salaries, but do not consider the higher standard of living involved. The gain is compared to initial values of what that person has, and the losses calculate din the next cycle.)
Such behaviour still considers the purchase of goods as a cost when calculating profit gains, but the hidden tagged costs such as taxes sometimes are carried over. The difficulty is in the fact that such hidden costs are usually minute over time (Bank fees on ATMs, Sales taxes), and calculating where the threshold of tolerance is can be a hit and miss situation. But in such a manner, an economy can be kept at a slower pace, while still allowing for some profits to be held by all. Such considerations work well in closed economies.
How does this have to do with MMOs?
MMOs, as per the original OWE document based on Bartles discriptions of player abilities, can be broken down into the three professions mentioned above. There are people who gather, people who create tools, and those that hunt. The three divisions need to be separated. Crafters, for example, excavate mining projects as well as craft, instead of more gathering-aligned professions doing the same projects. When a person has the ability to do both, even after choosing a more specialized field, such flows of goods get messy...UNLESS there is a time reduction from specialization.
Bootstraps- Most MMOs bootstrap the economy at the beginning to help jumpstart it. The problem lies in the fact that so long as the injections remain constant, either the leakages need to be bumped up or the economy will face a large inflationary period. The above theory shows that everyone in an economy profits, even if money flow is held constant and their monetary values remain the same. Imports (NPC Purchases) add value to overall gain, while not diminishing the value of money.
Balance is needed between the injections and leaks ONCE the economy settles at the desired monetary level. A small amount of inflation is good and healthy, and helps to accommodate new players who join (Once someone new joins the increased money economy, the average balance each player holds is reduced, and counteracting inflation), but not to the extent that a bootstrap affects it. The easiest solution; reduce the money injected. Some players will complain, but it’ll balance the system.
Injections- These themselves need more balance. Hunters kill NPCs to gain injections. They also receive missions/quests/etc. The other end of the flow(the gatherers) should have some form of injections as well, to ensure that the profits don’t pass them by, or forcing them into other professions to capture the profit.
Specialization- Does it exist in terms of reduction in time? Or is it simply an increased level of skill and ability that makes entry harder once the advancement is achieved? One of them is good, both is better. Crafters, as far as I see it, have more trouble with productivity time gains than the other groups (Hunters increase in specialization, the same animal dies faster and more often). This is more an unsure notion than something of change……
1 comment:
Good for people to know.
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